Natalia Wallace is the new controller for Smart Software, Inc. which develops and sols education software, Shortly before the December 31 fiscal year-end, James Cauvet, the company president, asks Wallace how things look for the year-end numbers. He is not happy to learn that earnings growth may be below 13% for the first time in the company's five-year history, Cauvet explains that financial analysts have again predicted a 13% earnings growth for the corrpany and that he does not intend to disappoint them. He suggests that Wallace talk to the assistant controller who can explain how the previous controller dealt with such stations. The assistant controller suggests the following strategies: Click the icon to view the suggested strategies.) Read the resultements .. d. Requirement 1. Which of these suggested strategies are inconsistent with IMA standards? Persuade suppliers to postpone billing $13,000 in invoices until a. January 1. Record as sales $115,000 in certain software awaiting sale that is held b. in a public warehouse Delay the year-end closing a few days into January of the next year, so that some of next year's sales are included in this year's sales. Reduce the estimated Bad Debts Expense from 5% of Sales Revenue to 3%, given the company's continued strong performance. Postpone routine monthly maintenance expenditures from December to January aceme Requirement 2. How might these inconsistencios attect the company's creditors and stockholders? Je Assi The inconsistencies noted for Smart Software, Inc. particulany impact the financial statement information provided by They will be led to believe the operating performance (probly of the company's t Assig is. This misrepresentation may result in the investors with the correct information Simartyros may the company with the false income information when they may red with the correct income information that it really Y credit to list and then continue to the next question Does not violate IMA standards Inconsistent with IMA standards Not clear whether it would violate IMA standards Natalia Wallace is the new controller for Smart Software, Inc. which develops and sols education software, Shortly before the December 31 fiscal year-end, James Cauvet, the company president, asks Wallace how things look for the year-end numbers. He is not happy to learn that earnings growth may be below 13% for the first time in the company's five-year history, Cauvet explains that financial analysts have again predicted a 13% earnings growth for the corrpany and that he does not intend to disappoint them. He suggests that Wallace talk to the assistant controller who can explain how the previous controller dealt with such stations. The assistant controller suggests the following strategies: Click the icon to view the suggested strategies.) Read the resultements .. d. Requirement 1. Which of these suggested strategies are inconsistent with IMA standards? Persuade suppliers to postpone billing $13,000 in invoices until a. January 1. Record as sales $115,000 in certain software awaiting sale that is held b. in a public warehouse Delay the year-end closing a few days into January of the next year, so that some of next year's sales are included in this year's sales. Reduce the estimated Bad Debts Expense from 5% of Sales Revenue to 3%, given the company's continued strong performance. Postpone routine monthly maintenance expenditures from December to January aceme Requirement 2. How might these inconsistencios attect the company's creditors and stockholders? Je Assi The inconsistencies noted for Smart Software, Inc. particulany impact the financial statement information provided by They will be led to believe the operating performance (probly of the company's t Assig is. This misrepresentation may result in the investors with the correct information Simartyros may the company with the false income information when they may red with the correct income information that it really Y credit to list and then continue to the next question Does not violate IMA standards Inconsistent with IMA standards Not clear whether it would violate IMA standards
